CCL - Earnings call transcript Q2 2018 | Carnival Corporation & plc

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Arnold Donald

Good morning, everyone. And welcome to our Second Quarter 2018 Earnings Conference Call. I'm Arnold Donald, President and CEO of Carnival Corporation & plc. Today, I'm joined by our Chairman, Micky Arison, who is in Europe right now; as well as David Bernstein, our Chief Financial Officer; and Beth Roberts, Senior Vice President, Investor Relations, both here in Miami. Thank you all for joining us this morning, and thank you for joining us in what is known internationally as the Day of the Seafarer. seafarers our for the everyday those they positive world all on have quality to out the there impact over. Thanks of life

were our last more We those our hundreds will I on end the March results the that as must earnings cautionary company, above time of before begin, to well $XXX in today's than note $X.XX strongest moving midpoint and March These travel year's of support to record record of $X.XX some Now of of range. press professionals top us mitigate second currency, in of release. adjusted please higher refer you results. this history That's the the efforts and forward-looking. of as per well higher. our be who on of thousands share employees, the brands. guidance than beyond guidance. of the March our of million who for the call year reflect guidance statement since as XX% passionate and above and Therefore, delivered I that more remarks from earnings our efforts Adjusted that's as than XXX,XXX-plus $X.XX $X.XX year prior day against go a both fuel helped every of drag high above quarter the Collectively, our

floor continued midpoint full more revenue guidance, current operating March Despite of the constant guidance our for guidance below offset we the Essentially, business. underlying yield and in of is compared this year guidance quarter and of guidance. year fuel It to to to unfavorable full strength greater full fostered become the reflecting see to currency $X.XX now of has December original in roughly reinforcing and X.X%. ticket the was currency December continue performance. the our the strong the of impact in $X.XX, for prices for year-to-date While our year $X.XX impact fuel our have currency, our cruise of than demand offerings growth strength range

on improvement of year. the in last the top Now that's achieved second X.X% quarter

milestones, theater team debuted Elliott. Super by IMAX capacity ship entertaining & Jude's. Seuss themed artist lip by included new experience Grammy-award of our expedition Pig between innovative Also favorites programs, continue which capacity by will through City, nice Guy's and Weil ultra-luxury Queen Eagles with excess and singer, a highly Evening yield long-standing luxurious close. part quarter, as best ceremony programs, fun, serving We New aqua including the XXX and Carnival's delivered roomy an in spectacular with because support in which Ovation our Dr. venue, number provides Smokehouse Ovation from company, because showcasing park; Carnival efforts. alfresco future Fieri Seabourn new nearly SkyRide during growth core in only ways from a Festivities as ongoing Champion Guy drive Page, growth by in burger featuring revenue our accommodations. experts well bar St. sophisticated on Line strong the naming but growth the guests talented meaningfully naming marketing even that measured success. included around Seabourn, as Seabourn also winning X more creative impressions World record-breaking young site. a with Latifah; include offering | at St. and two the actress, up Ocean fashioned beers hugely garnered a sea. York arguably fifth decor Jake actress kicker, relations WaterWorks featuring Select ship brewed measured Heritage focus at will Horizon's a Anchor Brewhouse, with private craft serving Earth distinguished as an media demand every to guest during The brand, experience, of up not a to Tim Family & Philadelphia Dr. guests nature and Patio, Jude which at UNESCO sailings increasing features Spa significant Children's By Carnival serving The veranda popular its lit of allowing a burgers expedition-style In onboard, this Rice, financial Guy's with ceremony excursions results, of new Harbor Seabourn accounts, and introduced to our We Research and and also all-suite battle Hospital, our Elaine March, artist sync suite, for dining quarter Grill a strategy. experience, The to fleet. of complement guests its important acclaimed ceremony as Keller. a reaffirming to Malta, of our barbecue Cruise aerial Ventures up public Valletta, extra to million real-deal by in launched well an An choose ships, May Andrew was the number of Adam our godmother XX Horizon, of godmother, a world-class Bowl we a contribute the new Wellness Carnival on are Thomas all Tihany

growth takes replacement cycle into ships. measured of consideration the strategy less-efficient Our also capacity

Spain, the gateway minority to to quarter. from Group Alaskan two number legendary our XX% years, on a annually ships to to this we XX terminal the Barcelona. our one X average, Brisbane. announcements to secondary We XX remain nine providing core entered to a the state-of-the-art Holland In bring to later globe. the a million sell, throughout attractive Over last our expected Alaska, a announced ships achieved we an additional we cruises. have into at more Australia, even call Barcelona. long-term strategic year guests. in Gold and of we of agreement plan We'll in opened the China brands venture market, with cruise XXXX, a around operate, strengthen completed Rush vessels from over Brisbane. important where Moreover, diversifying destination We the sail our in ships In and our on priority of two of further track into year. larger calls and in enabling ties ships fleet Alaska, and while our even Chinese in have the the second to sold strategic removing In Skagway, America guests time, the to development be recently of engaging seven fleet take brands including rights new are terminal new berthing left by a in Port for position add with port efforts the ports to continue At this same we joint home our we past more milestones that Asia, port development region expanding recently

For Sasebo for for preferential example, an agreement signed in recently we berthing in our Japan. brands

port development in development facilitate strategic a not and markets serve for will We in brought preferential source of a alliance long-term also will agreement an in the region. only of Gulf. the Dubai the attractive cruising as berthing of Dubai but Arabian call announced

quarter, the for also During we brands. received recognition our meaningful

inducted Carnival few being of Line the would I well the Lines there are Most The we like Love year, and row; cast including being each a XXX Trusted in Digest Princess Reader's Boat fourth while awards, over Cruise of Cruises highlight, Fame. for into receive year by Hollywood to Walk Now named Cruise a the and

Jeff per more Corwin, Garcia year with And Our Josh ranked series, Ocean million filmed and been among television with with The Originals based onboard most their X honored The reality Britain year. even in the That's factual Treks in has XX U.K., Awards. Voyager Ocean programs Creation, episode. Cruise, in than TV have Vacation Telly on the program, last with watched second viewers primetime Princess,

out Rights and by acknowledged Employers, Best Equality by the officers fall. the and travel revenue our and earned perfect cruise our Responsibility the with and was score on nine Corporate and Center DNV ranking the continues Index, top the bridge Safety Campaign technology Forbes to Our as X,XXX is six world Excellence Human approximately of training in maritime our our CSMART, the industry's for one the Center commitment across as safety Large Corporate simulating system, XXX to was citing new as corporation rolled to to the GL, be ongoing highest equipment of curriculum. a Training, engineering XX% noting, X Maritime inventory one Corporate first which of worth for societies, most world's advanced by classification Magazine by lines Progress of brands sector. of CSMART's Citizens leading in Simulator leading recognized Also Best for expected management our XXX

on efforts to track deliver to and continue shareholders. remain of cost containing leveraging leading operations, by nearly million distributing our industry we from we growing costs savings remain also strong scale. XXXX With cash to committed cash $XX to as We in

$X late Since returns $X.X million quarter, now same billion program. we bringing quarter, share our exceeding in repurchase March, since dividend the of to total time, increasing by $X.X generating $XXX reauthorized cumulative to stock, the share accelerated repurchased annual shareholders During invested than dividend billion per our more over we we $X.XX the billion. distributions Carnival At XXXX.

industry. operating our there performance, several all advantages drive In our addition to are efforts to to structural

significant we rooms to than is industry have increase less will a in world, of told, opportunity penetrated existing continue represents our operate of cruise long-term an to all all in X% as the We constrained. industry All in levels that we and penetration capacity under the be markets. hotel

yet from We resort greater comparable satisfaction money to XX% gap levels a can with vacations. also for enjoy that land-based range value a land-based alternatives, higher for anywhere offer than value significantly XX% we

reaching XXXX. million the In America demographics age from from XXXX XX in in course, the cruising, of boomers. million to are generation growth benefiting aging in the number of XX the goes baby alone, Of and supporting XX XXXX million retirement by people the and millennial North

generate levels proactively by we proposition, that's time to times on time, cruise support for same Factographic up retention, and in to same guest yet these experience at invest stepping is wealth trends our to per segment has in more globally already our markets for powerful this experiences also target-rich the capitalize another the year. advantages, frequency time, us sail while consideration as increasing Now propensity others. as growth high things. To through multiple at increasing And environment efforts, consumers and given recommend increase public demand in relations structural our to the many resources, the than the continue a cruise marketing buying driver. value and rather emerging to collecting

realized the quarter, continued build capacity generate strength combined effort execution the turn With in already demand call to increase in the in prices. year all on strong this sustain demand, our momentum Our All that, confidence invested capital bolster in many the and to ongoing the to David. I'll achievements and conviction return double-digit our delivering fundamental with beyond. XXXX ability told, in to

David Bernstein

you, Thank Arnold.

metrics all on cost trends to unless constant XXXX Before with I revenue, ticket start my color will results. our summary with note finish stated. I'll and begin, XXXX be update prices I'll quarter some today in guidance. please additional second an June on and a of up current references booking of our Then otherwise provide currency

sides brands, second due ticket cruise things, ongoing the from our benefited The $X.XX by indicated, both net efforts, quarters. and which costs, on from EPS net closing the from was our Arnold was Atlantic costs guidance. yield, from benefit bookings improved was from for As pricing $X.XX $X.XX fuel, quarter above driven between yields, to variety $X.XX adjusted a increased and onboard stronger March This was lower three was all to the on $X.XX. was of seasonalization other of for excluding which improvement of midpoint the our of continue the

Now let's year. results quarter versus second our the operating at prior look

Our capacity increased X.X%.

NAA our more Our North as EA our segment, as were commonly were commonly Australia and brands, more brands, segment, America up known Europe Asia and flat. known while our X.X%,

net total up were X.X%. Our yields revenue

impact. revenue which net last yield ticket also Caribbean, yield. increase in in strong let's the apart net ticket previous our hurricane brands' up NAA first, a yields decrease guidance two were the a comprised X.X%. fall's Overall, our of result the of Net Now of included was break was as itineraries components a in

with other other similar Second, an brands' revenue major In higher increases by the costs, in partially and brands' increases adjusted itineraries Europe World the Atlantic, during in worth X.X%, as was our increased Cruises. Alaska, driven increases last that previously third, strong do in various see in which as with was $X.XX, add Caribbean will X.X% EA and and EPS itineraries our likewise showing cruise offset highlighted. we quarter in with costing higher improvement and fuel, growth. improving Europe on time. NAA second onboard trend China of yields categories a including all over we year days our X.X% expect well by the than Net $X.XX sides programs, to net the being I more solid dry-dock summary, which quarter, both $X.XX yield excluding

with Now ahead the turning that of booking bookings for the remaining have of ahead to this year year. last year prior time, prior are at two volumes XXXX of At the in the Booking been quarters remaining at prices. are in trends. running for prices line two XXXX slightly point of XXXX cumulative higher quarters

position. booked cumulative the into down drill let's Now

occupancy is prices. brand. First, The at on for our lower year behind the prior NAA Caribbean

Rico, Given impact continues the the flow Puerto the Caribbean from hurricane to negative affect itinerary. news Southern

are the line at at previous result, occupancy expectations San with made into occupancy year program call we itinerary. is on higher prices ahead prior our driven a is The significantly the the Alaska with Juan consistent and prices. principally the of the earnings in is seasonal by year on prices. lower European prior As we guidance. comments This lower our built on

However, as like-for-like the mix. end, by yields on have year's conference last calls, last record impacted Alaska the that than levels. yields I expect In itineraries we will two Alaska in higher are indicated

our for brands. Second, EA

prices. slightly ahead For higher European itineraries, their occupancy is at

into not the the cumulative it time, at prices. of and slightly this will I bookings to much too I in While ahead caution our year position. you At numbers, provide is read booked XXXX point early, are higher prior

want our I Finally, to you June XXXX on guidance. color provide some with

three The our while continue the was said, we Arnold performance. to compared guidance our guidance in driven change strong year is to operational have to in As guidance. our things by full range $X.XX, $X.XX now March of

second benefit First, quarter. revenues we flowed through the in from the higher of operational $X.XX

Second, we of the prices, expected $X.XX fuel Higher dollar, unfavorable accretion higher Arnold the the benefit to currency $X.XX. to the by unfavorably relating from $X.XX. net in mentioned. impact purchased we of fuel $X.XX cost third, stronger and while that shares second quarter of was fuel derivatives year an prices, And is net fuel derivative,

And by the $X.XX. June Remember, have who the While I'm modeling XXXX guidance impact XXXX, prices call FX on calculation those in are fuel realized turn fuel currency of back includes impacts the no of fuel and from XXXX for derivative fuel we and derivative price topic this unfavorably would stronger I'll the fuel over you impact, so and XXXX. for using Arnold. rates, the year-over-year dollar of benefit now higher losses to

Arnold Donald

questions. David. you, for lines open Thank Operator, please the

Operator

Steve Thank go [Operator Wieczynski Instructions] Please question you. line from Stifel. first of with comes ahead. Our the

Steve Wieczynski

Hey, good morning, guys.

Arnold Donald

Morning, Steve.

Steve Wieczynski

morning. Good

the that the for the when outlook yield guess, second I the yield quarter. I I probably where year, I were. now question's yield than the for in So beat yield bit expectations kind the there, guess guess, for stronger half of a the at I year up, -- - back stock's lower, and given you're had typical you are the selling implied little and think, the guess, we your the X% your thoughts investor's out in of look your

bit out markets half are terms So in view of can at the more back a point? are of, think taking there you conservative there us help the maybe guys you any this of year about a where little

Arnold Donald

on color Well, it. let to me add Dave, open that. some

The in season to as was of of but half year. We're on you fantastic because said back modify we we going David, comparisons really coming, we wrong. always factor to half, back the the the year. go currency. hurricane We can into adjustment the we First didn't fuel off as have -- to back want guidance, of coming confidence. perception it's out, of think half are half the in we're very pointed And year. comments? The some we our for tougher last have and prudent the all, David the things the our but obviously make we got give call, business second confident strictly about a related guidance

David Bernstein

Sure, yes.

as the I Arnold quarter. expectation last As was half same yield it said, mean, back is the

what back there is if saw the some looking down think particularly strong the first versus mind keep I we yields was, was the in more half at the had you're what in particularly in that that half, quarter, markets, was than offset second indicated Caribbean. we

first trends. and volumes as seeing, great in half that year extraordinary But business really in excellent So the are said, we some the strength drove booking the Arnold of of other the it. it's markets

And we comfortable. so overall, feel very

Steve Wieczynski

heard I the are the at about are that kind look - we the guys the viewing closer you way when you conservative think potential I expecting that sounds XQ, your late if the typical pretty fear it little year about around of XQ it? because like bit guess view in Is right, this there. in a just So book of maybe taking here - right you a and guys you're hurricanes? to way consumer to I mean, Caribbean

Arnold Donald

of in Again, and curves and with First last forth. and all, significant of so year, booking are doing a had capacity year we're even occupancy great on so increases, better terms we strong.

booking Having malaise. a got So question there, there's referencing We're But last performing year the was it growth. year with all against a about because having that, hurricane and well significant so there strong strong. said Juan we very Rico talking keep booking's and originally Caribbean, obvious is is missing Caribbean impacted of additional season. the no the for that portions said Puerto period hurricane strong. San a And that, we and during by now

David Bernstein

we -- Arnold year prior was the three segments, of different the cumulative driven are pricing be And I being what was position up. break we behind indicated improvement down with into the there, if we west also Caribbean itineraries think and last Southern on you and to seeing, by the the indicated, year, as San Juan prior that the down, we was booked quarter, and building the Eastern said, Caribbean line continues we're the -- Caribbean. seen in the an now had So the the have

over improving expect improving see We quarter Caribbean. trend So last the hurricane second see an year, expect the to the do probably - trend to we and was we in biggest impact from time. the an

Steve Wieczynski

Thanks, guys. Okay, color. great. great appreciate That’s I it.

Arnold Donald

you. Thank

Operator

Our go Barclays. of Felicia the next Please ahead. line from Hendrix question with comes

Felicia Hendrix

you. Hi. And thank

you on hit of dialogue. I the really in think lot a that concerns last that

Just two with first the say perhaps wondering, about - you can line general, the prices, where maybe are you talk saying your who we three year [ph] the volumes prior business cumulative the just talk are you're that March about, and And in booking at the industry what are been higher on this what us sentence you you I outlook, year -- as next March, bookings year. the advanced have quarters can with for David, prior since three next aren't with went - of familiar that of for through ahead line in with slightly in just the sentences XXXX But people prices. year's this. explain then quarters call prior to the know for your running time, the there? that and since

David Bernstein

in or the prices slightly volumes - are since ahead line. That in booking that

Felicia Hendrix

Yes.

yes. - So there

David Bernstein

third, second and was fourth where quarter. what So booked cruises for first quarter this revenue in the is recognize during the we'll

So in including and the fourth only in second our the and results. we actual periods at when quarter the second we're quarter is were We're that's history, say the quarter. quarter including second not what's for for in the made looking first because we're for that bookings quarter, future the - not third the and

the you trying to dynamic future what looks a like. So we're of give

why Now in you'll were Caribbean, Because second I said, and is if improving up. - what as volume. the Caribbean you we But an trend impacted but break overall, it the quarter. is - - apart, markets we Caribbean were in that's the are said, line. was prices booking impacted, in that the the that And major as seeing all I

Felicia Hendrix

Okay.

no don't yield said, went you like But and Caribbean improving. you kind itineraries, I want is through beat the of to - in reported So and operational other a dead your outlook or there's again, horse. the last since change all kind of quarter? you And the

David Bernstein

Correct.

Felicia Hendrix

about... Okay. talk And you when

David Bernstein

Other wouldn't than currency, fuel and so I say...

Felicia Hendrix

I fuel you and to fuel Yeah, kind currency, And color gave are just of What XXXX when using? price exogenous. talk you you about other always consider than and fuel be which for us - some FX.

David Bernstein

fuel. some week, $XX use that we around, off at last cut at for has price. we but point bounced So late It

Felicia Hendrix

to and that was for about as language then sentence back some your all talking And that behind release reason you I that? quarters. Is any now in you're just periods. the - getting there well, Okay. press the have think March used that next future three to of And like

David Bernstein

we press has we our Generally, been traditionally saw That this In No. just because a next of wave quarters you'll But release. XXXX back, of lot X the the for been year, the for there we quarters. give wave have you a three actually broader season in quarter it's you picture. first see -- season, we've look done. what to traditionally was during chose if bookings

Felicia Hendrix

my which for keeps answers I question thought final - stock this were been And and - call, to conference clear, the your throughout Steve's, last me, going throughout your for down. you've Okay. pretty

there like to or David, anything Arnold say? is you'd So

Arnold Donald

They're I think addressable under world. call, the I kind business, around the penetrated. say of our all look, markets of large the have on reality we is

highly We the know overall, on. people actually industry about have capacity and I is constrained. product so capacity differentiated offerings. concerned are But

with each and source the one So when P&O don't and with in one And even whether it's going on don't and mass And America, assets, There are happens have we're vacation. retirees, okay. even cruise, affordable, who for to the time things with than North are That's general. ultra-luxury in growth - versus as elsewhere people market, AIDA, to population ship some et And we other, the British cetera, assets. What those UK, for Seabourn, the Carnival dramatically or versus travel market from in with luxury for build trends positive and one millennials German brands. they here for overlap. ultra people we're market, it's compete and a increase in the value and source their who or brands over-index but well. better hands in contemporary vacation very time, in have more retirees land-based whether those

So we things or have yields lot of have a with of fundamental curves problem in don't right We terms booking ahead going. looking now a or any of that.

know actually has doesn't demand given they're And mobile, And every where capacity. always capital. to concerned an are things. a else like what business. that for And existed capacity and our we any always moderate pocketed appears we're that's supply. to between the assets do. improve further correlation can intend there's what doing in year, But malaise we've problem. exist, empirical our yield., been So is about or the we going But and a There's markets we'll earnings create that's we us, capacity. to There've And to show we and for year other complicated not more hurricane if Usually, here in so don't, our move. by something return evidence our even been we're on capacity invested exactly exist. grow that and importantly,

I all to say. that's So have

well. so people little about hurricane and China of very the and investing and multiple to getting think long double-digit. had dynamics going about bad or in we a is ahead. one record another. super performed earnings business good. I we the This our to strong. and And going quarter. concerned we capital There's in to on. pathways return Things achieve We Last standing mess is year, that have We year, very happen. to were a double-digit promise We China a in future. market the That's to season, had still bit a made just keep guidance look grow look on

I that's So have to say. what

Okay, next question.

Beth Roberts

pre-hurricane booking at in When context patterns strong keep lot hurricane comparing patterns. booked booking part you occurred. just the the on booked on beginning to I something we're very this of the the -- And would look booking also, the are mind hurricanes at keep were patterns, today a of add please - was in that the the that post-hurricane. time And year mind booking patterns.

So really later year, seeing David second in more the said, this as quarter. that with impact starting

Felicia Hendrix

you. Thank

Arnold Donald

Thank you.

Operator

Farley of next ahead. with from Please Our comes question UBS. go the Robin line

Robin Farley

second prices. ahead last the prior during I for - and two half I booked you're including versus want I said have - second everything higher second the for of But I line. you a a Hi. half, subtlety in in kind the saying. in the second prices to make of to year that QX, was mentioned of second quarter what sort the the sure understand cumulatively, are of you're at what just they're during bookings quarter. came questions, you the David, difference And kind think at bookings of -- slightly ahead slightly

I that my decelerated to I second So And what of the clarify. premise But does during perhaps, wrong. the question QX? - misheard. I the that's half prices wanted and have might in that have of mean year is

David Bernstein

said, - what that booking line, quarter. volume by in I But essentially prices repeated - you which have was so you keep the to you're when market, you apart in second during at No, that the if in market to have mind very were fact it the correct. the Yes. you is look looking break at line

Caribbean. was As prices in-line the impacted I the the indicated, up, except markets, by Caribbean, the were and major throughout the other

during a not as which October, year. until indicating Caribbean our said, Caribbean, was is Beth last the the hurricane have lap and perspective we booking the before, So get The we as Arnold to and won't lapped from booking fourth September quarter. situation

managing the and seeing volumes just We're we're answer bookings. the as impact the far we're Caribbean your being on our Does that But patient in the are as great to So shape yield. concerned. question? hurricane highest affecting booking of

Robin Farley

think so. I

about think maybe quarter your the same if and I - is a that outlook some of the But to biggest we point - of is ask I I I year-over-year comparing guidance idea quarter the a ago, post- not. you're that post-hurricane, also guess, that issue. Because could pre-hurricane had is ago. then, so guess, pre-hurricane versus there commentary the sort

- now a if is in for pricing was today know future next a the just there mentioned make there price with quarters. quarters -- XXXX future future the saying the about for next periods months subtlety, wave. we happened quarter you comparability to in on I all anything think view on to March, three apples-to-apples, price thought just would periods you'd line in price or wider or periods. the But quarters some sort X And you to were and you're trying said were year-over-year what's next of line, is in is I'm but all give You that the commentary that periods ahead ago, three And the the was because comparing ahead all be like a versus ago? three the pricing versus it basis? same guidance else

David Bernstein

coming all overall of Yes. a significant be on if three - isn't majority because difference the we included that similar the There in years. The quarter. quarters you comment of bookings the majority And would - future quarter for coming in we that remember three the yield the the did second bookings as in second saw, rolled X.X% the are have, ticket the And the off. quarters. the next

And a our commentary. in second very was the saw quarter quarter. first that we bookings in for was that the So that March strong period

Robin Farley

close-in I be half where you've thinking quarters. second mix should your of - where clarification. we very But with not QX, sort weighting QX. very makes in maybe close-in guess, that second itineraries very there maybe from good in then thinking was to of - strong. sort were cumulatively, QX. lower It that guidance the the a possibly, half? rolling more makes QX, that like very just about that nicely Caribbean's upsides you off. But sense. conservative few little mean, is or bookings we are things in last was going I close-in the your - there beaten about either as of sense. And the just be actually obviously QX. not The strong it in last close-in anything the be just would should Is QX strong Or seemed way, then into That Okay, seems

is But have close-in wouldn't be there - is just reason to - you further in advance? And than there more should we well. as conservative being what upside continue so any is obviously, all see maybe keeping good why anything anything

David Bernstein

We our include an best bookings. we Yes. expectation try guess for terms to give you the quarter close-in and each of guidance, in

into our our how As a always know We one very as indicated, got an something, guess. on we and we we hurricane give well. in will we we're go, also you always in wrong. forecast coming, Depending how the build expectation. I about say Arnold There's We and thing direction. best which guidance so things is difficult. so and much season that build - by just never It's

Robin Farley

approach. other That's - it's I with than your wanted again, I stress And Okay. guess, conservative helpful. guidance. test to just there's appreciated think that I to conservative if very else that's you're see anything it that And the

Operator

line of Jaime Our next the go from Please ahead. Morningstar. Katz question with comes

Jaime Katz

good Hey, for my questions. you Thank taking morning.

model, think business? And being So has Thanks. know a trail expenses thinking half I'm we things pushed And looks if that, curious that the into said cost XXXX. of have how to guys maybe timing in maybe at little off are But that flattish then fourth like there of growth in of the are our on about long-term quarter do be bit. in any should changed heels you it all? I we inflation. that this historically,

David Bernstein

Sure.

the Well, did quarter, to second dry with year The of do on is that mentioned do up of had docks. and the to in days. calls. were And with quarterly we has I seasonalization about number the timing season large costs dry-dock that talk quarter the seasonalization this previous opposite. the exact the cost So - fourth

So cruise reduction excluding per see net ALBD, a calls. fourth with dry-dock mentioned the previous will the fuel, and quarter, days, we on cost lower that you in in

So it's delay expenses. of not a - some of sort

estimating December. since We're still X%. approximately cost not Our the for up guidance changed has year

is we As cost the track a - of have the on we side, This leveraging far and of in as our to we're increase opportunity sourcing next on $XX that is Arnold so see things scale the for And capacity million mentioned in X.X%. now, a also similar opportunity years, future year, savings. our we been concerned, right on lot do there. - XXXX, of couple there's

opportunity the we're the have on well, as will ships expenses scale we well our both larger that ship's leverage to in, as there So with side. bringing shore as

there for good But costs to XXXX. for specific some to opportunities for are us as So it give is us costs to keep control. guidance under premature

Jaime Katz

on of it's the touched curious the Obviously, income note, some And commentary. going that's on what housekeeping consolidated is, to part in then had Alaska business And I'm you business in that meaningful. a be the prepared tourist of statement. scale Understood. if the

So what that I don't - a just for the sense of business I size is. good have

help that be could think great. would you that, about If us

David Bernstein

Okay.

So a that run The and our have be it I partner a and close minority so long will the business the it's - interest, it will on this we XX%, in going consolidated we're our positive a -- mean, summer, taking purchased, have the net deal to income. XX%. hopefully isn't sometime impact will because

for be very will before of we because impact minor the XXXX, through most the we'll ownership. However, season well take be

I So much impact an of numbers. our expect have it on to XXXX don't

Jaime Katz

that'll And solid number, through a flow income other as Okay. right?

David Bernstein

Yes.

Jaime Katz

you. Thank Okay.

Operator

the from comes line Harry of with go question Curtis Instinet. ahead. next Nomura Please Our

Harry Curtis

morning. good And much. very Thanks

Going your for the expectation you back that quarter? for about third factors building comment on guidance degree comment to an David, in hurricanes. can to what David's in

David Bernstein

quarter. an going fourth time. specific we factor know give - we've to to and happen, at things off it we to over take both hate and third are things to educated it's try You Harry, guess a - point we I all in try for based the it's seen because know, number this

Arnold Donald

high-yielding We things these taken scares. do us, don't year markets happen. happen reasons. things the And hurricane-specific. every itineraries are all away different mean, disease world. from necessarily around that get There's There for geopolitical I

usually of matter general - on it then so and look thumb, do climate. and at thing. rule one year, how that's But - practical impact, time the happens a stuff it. And the come realistically, more and trying because we we to put global historical we just judgment put And so level and a with climate than of of be something happened every at up it's that's we based the on

Harry Curtis

XXXX, given by that so negatively, a as a then Caribbean your us is can is give far being the year the And the seeing sense for pricing in that impacted you to follow-up next Caribbean encouraging? XXXX of projections you're the for whether or - not

Arnold Donald

in okay. want to emphasize generating everywhere you we're in Can just Caribbean, We're the generally When negatively, say and more earnings I everyone, else growing to thing? in too. Caribbean, say growing one earnings the I we're the more world,

the no the on growth Caribbean weaker yes, some overall, yield there's on be growing basis, other So in we're But go David. ahead, earnings, markets. But might a than weakness relative and business.

David Bernstein

Yeah.

the are line first So occupancy at after look you if and the that, much meaningful which because most that is quarter, is slightly books. it's Caribbean, the in in the -- The is probably on not ahead. pricing

just like before, see are Caribbean. again, improving the So continuing an we in to said I trend

Arnold Donald

fuel the in with we is. and a it's happened offset it's offsetting the of to victim conservatism. not we that all of can course, guidance for put is to But But our what conservatism. change. And a practical. aren't just be own lot that's just reality our completely is all -- fuel It's we and reinforce, may us, We be guidings haven't currency. of that, currency the the But trying current of

Harry Curtis

does a wallet recently Very you And one. talk brands Can you more the any about as give one seeing customer less by to any brand? second by pricing and -- their of half you versus indication Are into good. performance generating so, quick health And looking pricing? quick if then that the health, your just segment?

Arnold Donald

one any to have significant certain year, always, in increase say I others. relative given may brand would brands

common stronger certain And brands. any to five long-term, sure, portfolio big And But happens. increase some next to suggest practice in that's we year, patterns underlying brands the others. that going a trend to Is No, have some as by much when would see be in for given terms there don't a that source are relative you intrinsic a appetite brands. market of portfolio, for has one seven just years brand other systemic, versus of brands? the so the any

Harry Curtis

Thanks everyone.

Arnold Donald

you. Thank

Operator

next go of Wolfe Our from Jared the question comes Shojaian ahead. Research. line Please with

Jared Shojaian

good morning, taking questions. my for everyone. Hey, Thanks

So the to XXXX booked I about position. wanted ask

And at prices. at you ahead slightly think last think I higher higher I quarter, ahead prices. said said you

last position So just elaborate that? XXXX quarter? can the since on Has you all booked changed at

David Bernstein

also -- sure through and not at talking -- previously I we I'm mentioned, of so a gone what to. was have the where But about slightly are I you quarter, between ahead when where sometimes, There detail remember, referring hadn't have points It change last about is So XXXX talking decimal you're you're difference our point to we the ahead, adjectives. here. all.

too -- much that. try not I So I read mean, wouldn't into

Jared Shojaian

Okay, this question about at at ask you're got ask point If debt-to-EBITDA. a at a another And your look low little I'll I it. I'll today, net X.X leverage historically then times differently. your stock.

supply on willing level wrong it in buyback growth getting aggressive that's concerned buyback now? to more stock, there from what in guys the go aren't online, your if be get So more on the that near you right to you'd term? is think about the you really to has on coming market order leverage and And prevents the you the aggressive a

Arnold Donald

Two rating. a quick can we credit to stronger. need feel comments. it We have to pretty we One up don't have standpoint. We be the is, leverage go X.X obviously a from strong even feel, comfortably,

we As X.X you say, X.X, have now.

shareholders on stock buyback is vantage cash in to comments So any this, and from buyback. than that other I'm not strategy our say situation make stock return point, a to through to of optimistically course, like going

David Bernstein

the we again more being did first buy quarter actually, opportunistic. second And then in than the stock in did quarter, we buy

where the And X.X We're look going forward the year. at of so so as the not expect understand, We're the more at you we end at we be like leverage we X.X. end at to you out, actually, point year. the do look of and just

share throughout buybacks of we those indicated, share opportunity mention, I'll guidance. borrow And so and to our to as done in as buy do Traditionally, an have include use we don't remainder funds to Arnold to we've the the just continue And year. to back date. buybacks those there shares

Jared Shojaian

you willing to of look at that's times, X.X the as as confirm, high just to the it? way go end helpful. by Okay, up I the be And year you'd to guess,

Arnold Donald

No, a don't I you But rating. we the a strong have say don't or I range to can anything. and want -- That's operate plan go we'll wouldn't that. to X.X. within misinterpret credit we maintain to

David Bernstein

at other would looking And broadly In we We've allow Yes. to And previously that the good at we'd end we're to a be we is X at range. cases, many times, increase times. the in range talked. leverage X.X. of what of the said better

conversations obviously look and that take as have going forward. will on team at a management we'll a something that's So

Jared Shojaian

Great. very Thank much. you

Operator

from the line of Please Stephen Our go Sachs. Goldman next question comes ahead. Grambling with

Stephen Grambling

expecting Brent the maybe Hi. I forward Thanks just between of to as prices, guess, as what when $XX, oil that, for between us bit gears the a shift backwardation, a your about at taking and your look a you I Brent on volatility. fuel. little changing question. guess, relationship remind hedging. process fuel we certainly part Can bit -- Brent fuel guess, talked there's for look of and I wider relationship we more as that of that further thought a in curve, and out? given are And as you there's in even gap in been

Arnold Donald

would I'll fuel We've we against protect the want knowing us compromise when done the capital to to at for prices in spikes did markets hedge. what the be to before have time. into didn't do capital. capital could hedging. capital the We them that have not We go collars. never the markets markets in the commitments We

in to ourselves different things obviously. so collars a are then, lot Since did protect we regard. And that

Our ratio's much better.

more lot a been. have cash than we have We

or better spike whatever. position weather a fuel of to type So we're much in any

The so The we've And hedges. management board never believed hasn't. fundamentally, in hasn't.

maintain and But doing we're sure companies make so play game, And fuel to one, going. the oil freedom Because at advantageous are look want our to know where situation. for operate never even in prices because way continually an shareholders. we we it that to the fuel we don't try number

that's business the So in. we're not

David Bernstein

going, use before. many this price we when today we've Steve, year for it's fuel price. of said the that as the and through do trying the price We the I to So fuel we think forward spot a our in of just forecast. to use the know any try see price, don't as balance fuel We but times We're where said. it, projection current and we guidance, make going we basically take existing not Arnold

Stephen Grambling

your gap just thoughts wide guess, be to to as fuel their in are changes given there's on follow-ups. I pretty clear, two the implementing versus the implement curves. fuel started to related that? One, we look just heavy And I a some of airlines And surcharges, guess, have out what something potentially XXXX, then like Brent to

any why able there is reason IMO the you So implementation? wouldn't amidst be the to purchase fuel lower-cost

Arnold Donald

Got it.

variability of to reasons. -- the And game not obvious terms the forward we crazy. try First we again, is of in fuel for purchasing all, of there play Brent,

You never going just where know to you're be.

do part it what's your tend that. not we And question, first again? of then to So

David Bernstein

The fuel surcharge.

Arnold Donald

the surcharge, yes. Oh, fuel

That's yes, something past, implemented was take cetera. surcharge at. et rapid look when a prices, in fuel a So spike there fuel could the in that always we we've

that. look And considered to would. that But doing far, think at this point obviously, have at. So that's now, spike, to we I we continue have and prices right we done if to don't not something were

Stephen Grambling

I’ll in Thanks. back get queue.

Arnold Donald

Thank you.

Operator

ahead. go Please Our next Tim of question Fargo. with Conder comes line from the Wells

Tim Conder

related this. Thank to you. A to Alaska, and couple of whoever David questions wants Arnold, take here. or One,

your calls the a is, that, strong You demand, your... but commented side, the shore year growth of mix limited somewhat there one, times excursion capacity the mix last restraining just correct? the regarding this couple You've yield Alaska. couple on still in of in to that's And a have very clarify

Arnold Donald

Correct.

Tim Conder

Okay, recent okay. the And transaction...

David Bernstein

business. tour the Purely

Arnold Donald

Tour business.

David Bernstein

Yes…

Tim Conder

that Okay. -- see make addressing you recent -- going is Will And that how things do do? transaction do here? other there you address see the Or need to you help forward?

Arnold Donald

it there. because would hotel because transaction we a is recent the base properties have No, really not,

so purely And mix a just issue. it's it's just --

We're really Earnings money. that a have just don't great. capacity's very doing It's we rooms. making popular The good there. growing. It's Alaska's destination. So are more hotel

as ones a have a and And bookings that volume that it the yield But others on don't with or a yield makes so don't. price. And like look it lower at it's then them the And are that impact. increases, not of anything. some cruise

David Bernstein

company. Yes. plan imagine, for to itineraries as the optimize you And we our Tim, revenue can

the within issue a Alaska, on. So on the to the positive it's we Inside believe have just will of plan a with the But Passage we while that commented Alaska, impact we mix overall that itineraries, company's yields. way context the incremental

a company. So flowing it's the mix just through Alaska. It's not negatively within to

Tim Conder

you call, again, in cited mix in also the but call; it's to more that's there difficulty then been talked a San last lot Caribbean? broader Rico this giving this than a maybe And Caribbean, relative industry little the call, about Eastern Eastern Caribbean particular. industry itinerary something Puerto here Juan the your the Okay. Is bit the in within you on

Arnold Donald

We not San Juan, so I'm homeport in that's we're industry. sure and that's different. one the that that thing different than

other. to of part guess, anything something I think their as year. you'd have But Norwegian frankly, we it we and Caribbean talk for do itineraries the I the to homeport. different or see went to but don't unique, particularly changed a

David Bernstein

were mentioned the now line in -- as Caribbean, talked I we Eastern we And had I said on Tim, been we price. price. before, behind on But

because great market last So mostly impacted a quarter. an we are those to Eastern for itineraries, degree, there. seeing saw was said, itineraries in it's the San that Juan the Caribbean, us homeport San as Southern we well. on what were Juan trend a the as And from we source And Arnold improving Caribbean

Tim Conder

lastly, then And Okay. China.

appeared you Are color then QX days? appeared last even guys yet. be, to not comparisons. easy in comparisons specific there, -- the over was good XX pretty have have there the though easier did any And to the you've seen what you onward Just year, QX really for

update there. on yourselves, whole, low and appear including industry obviously, going really would sanction And a So so related pretty to there's also. with as just risk anything forth tariffs on it for any the that the

Arnold Donald

are a our year they BXB qualifiers. sure stronger things last the et than cetera. Yes. market, of My bottom for usual market, this still line were those time. part contextualization And at basically small embryonic of is China, It's a all capacity,

year basis And on a positive China's for But the and see out we relative year. the full have looks But things right now, definitely it so stronger. China, so for far. conditionally, play things to look how

we would -- that on industry. Chinese going Korea haven't on any not sanctions, If still possibility time. itinerary there's that changes, this to directly either that at the Obviously, In some point of the I the cruise of help heard planning in last in nothing impact of side opportunity up situation in to in the still sanctions terms about open heard sanctions and could stuff. are maybe happened And there those. talked given week in what's be even But participate just the government-level China more. had we've new terms going some nothing. sanctions, additional on, to was high or and

Tim Conder

color. Great. Gentlemen, thank for you the

Arnold Donald

you. Thank

Operator

from question the ahead. next of comes Assia Our line Please with go Infinity. Georgieva

Assia Georgieva

time this last had summarize, year, at much Caribbean of seeing guys. quite is for strong for next because -- This as the we're in morning, we basically, am Good close-in I the that. very and not Assia. the demand. September, If QX to specifically, QX outlook And of hurricanes

of me of and quite we're are the we bookings because pretty QX, and that to specifically, Is terms opposed much most year, we it fair to So things get saw to comp to impact in QX as starting seems are slowdown that for this QX a and read? deferred in normalize mode bit. a normal. a starting QX a during of And

David Bernstein

time impact as by booked QX we the very QX last say and most in the would were the QX saw that QX. I came hurricane opposed the rather QX to think of we I for well hurricane from September, and and QX. Because

where gets it. then So it was started better seeing really QX over you time. And it

Assia Georgieva

assume at period. So saw enter ease September it the will QX, that year, for looking necessarily at year-on-year QX basically, QX, early last timing hurricanes the we when this as bookings, active season, we're as isn't fair hurricane poor to And opposed trends the point, that to we another significantly? barring comparisons

David Bernstein

fourth quarter hurricane. There's in no lap easier have I comparisons, when the we we'll mentioned the before, as doubt

Assia Georgieva

need before we gotten And We wait months X just get there. we there haven't to yet.

David Bernstein

that's booking Correct, baked which were All higher. was the markets indicating volumes. is current the other why I into

Assia Georgieva

David. you, Great. that. appreciate I Thank

Operator

next So Please from ahead. our the Badishkanian question of line with Citi. comes Greg go

Greg Badishkanian

the to that sourced. consumer strong North I going in Great. just Europe, you're be? Europe that that's sustainable -- The terms you will Thanks. market think And how to seeing you. differences know of European And versus American that of strength the in the been the for just in the

David Bernstein

European are So has XX% ships overall, keep Europeans. on Europe we our in the have the mind, fact our do brands. that all And to of Greg, with that guests in that of

And so about the occupancy at was the seasonal significantly booking And Europe European I strong when the we for had mean, market. that yield our for said in has us good at we a brands, EA ahead prices. and comment were our very been both slightly that I for ahead talked higher brands. increases saw for Europe, I NAA drove really second I the And program, overall, the did yield. about, quarter, talked that commentary, higher I NAA for prices

the for things Arnold all this overall for it's an a be and I for time. we to comments to believe market But us. market repeat forward. continue So us continue the we sake about And that made the of seeing excellent market are great won't move will

Greg Badishkanian

you. Thank Great.

Operator

Our ahead. with next line comes Scholes go Patrick question of SunTrust. Please from the

Patrick Scholes

here. Real question quick

gotten, the booking strong that stronger? reported you that say last or You -- you I'd booking some since less be to slightly has strong. the stronger, time. curve say just gotten has that since curve last same, noted Would earnings, stayed would continued like you gotten

Arnold Donald

It and it strong. was very strong, remains very

Patrick Scholes

Okay.

that. right. you. Thank it at all I'll So, leave

Arnold Donald

Thank you.

Operator

ahead. next Our go Please is Research from question Company. Vince with Cleveland Ciepiel

Vince Ciepiel

come to Thanks. I wanted to China. back

[ph]. the You recently introduced Princess Majestic

the that the next in and you're have continue hardware arriving market, there, year. an maybe time And making sense to kind to that just Venezia seeing that Curious there capacity you'd send system then it's charters for to do can it on market. update new make? been has makes like us it is how returns into progress? sending new And the evolving? on thinking purpose-built think distribution Costa see to You a secondarily, market of premium And if line the with progress you give you your the

Arnold Donald

Excellent.

first China market so in again, all, Yes, we largest Okay. going to our is cruise believe world. eventually, of the be

tiny, teeny we're So and right embryonic. now, it's

there So it sense putting makes hardware. absolutely and hardware new

large their a The for is huge cruise has ideally Costa several you very as goer. which course, ShanngshÃ of brand, Asia, cities lots filled home Chinese market a It's in Princess The Chinese. Zhu with some sailing goers. the all cruise elsewhere ships So of there the from The in Venezia, the is there. XXXX homeported travel, China. Gong The port to in source as will is there, suited time, Costa Hao Majestic rest it's in [ph], be for mentioned, introduced but year in China. of in fly/cruise of potential again addition both for great over and, China terms will It's fleet. purpose-built of be It the market overall Chinese world.

recently. that partnership CSSC over That's forward have I to cruise, And there in about as definitely brand joint presence. their will X-year just they've was plan. We with to mandated our And are Enterprises] in so moving a drive I [Stanley establishing continue venture and excited a China. with a mentioned, we there and as

very all of So positive. that stuff's

of itself, system the terms to ship additional added from a primarily we've partial distribution moved charters large sales number and We've charters, yes, In full-ship now et group of distributors. cetera.

And see because much short term don't there. markets there's the I I And the a us is a in what, But a mentioned, including of that large over I everywhere don't to penetrated, overly slowly much of There's for The small in China, China, from everywhere market. the sales we'll kind in market. growing time else de-risks opportunity for so things not are United time. is It's a capacity a the the as then total and is in grow dramatic concentrated there. bit still BXB world. in but a increase of States. component percent that and because bit today, effect, direct see the world industry, today reason the under see. demand being of addressable in of All line that pretty

a and the to And years. assets when continue And to market our turns And the but it's is of cruise and And it's long nature going are question. fits serve are China. several animal, elsewhere. accretive, we'll on. and to starts ships term, as so move mobile. been it's have creating grow you long market. we've your needed and But the stops for as that Thank the past participate. demand China, over the But and so There'll ships the we'll it's be not,

Arnold Donald

And call. We to guidance guidance your we've with give I the best beyond do We you, to the given very leave is really But that, reflecting business just strong. Thank you fuel currency. you changes and can. business strong. everyone. is on that appreciate much. thought we our The in that participation best our is you want the some always Thank the

Operator

that today's lines. and gentlemen, thank ask to Ladies We you concludes participation, disconnect call. and your please you your for

Carnival Corporation & plc (CCL) 25 Jun 182018 Q2 Earnings call transcript